When you google ‘currency conversion’ or ‘fx rates’ online, you typically see a wholesale exchange rate which is the rate at which foreign currency conversions occur for central banks, major financial institutions and large corporations that have a strong credit rating.
Wholesale exchange rates are generally reserved for institutions who convert billions of dollars annually and is not the rate that a customer would receive from a bank or foreign currency company to buy lower value items in a foreign currency.
Generally, customers will receive what is termed a “retail” exchange rate which is likely to be 3-4% higher than the wholesale exchange rate from a bank and potentially even higher from a foreign currency exchange company.
The customer “retail” exchange rate is a competitive retail exchange rate (typically what would be provided by a major bank) and in line with typical credit card and debit card exchange rates. The exchange rate will change regularly to reflect the currency fluctuations in the foreign exchange market.
- To see what the most current retail exchange rates are as offered by the major banks, please visit the links below:
- No set-up fees, transaction fees or foreign exchange commissions are applied to the exchange rate prior to or after performing the conversion. This ensures that customers know exactly what they are paying when the cost of the order is displayed to them in their currency during the Afterpay transaction process.
- An important benefit of using the Afterpay is that the payment taken from the customer’s credit or debit card is considered a local transaction. This means that the customer will not be charged any international card processing fee which is charged on all card transactions by their bank if they were to buy directly from a retailer overseas.
- Because of currency fluctuations in the foreign exchange market, the exchange rate applied will change regularly based on how strong or weak the currency is. The exchange rate is always expressed from the customer’s perspective so to work out what the customer pays, take the order total in your (Merchant) currency and divide by the exchange rate
For example, for NZ customers:
Let’s say the AUD is strong against the NZD and the exchange rate is 0.9090. If you’ve costed the order at $100 AUD, the customer will have to pay $110 NZD.
If the AUD is weak against the NZD and the exchange rate is 1.0100, if you’ve costed the order for $100 AUD the customer will have to pay $99 NZD. (this is unusual but can happen and occurred in March 2019)
For example, for AU customers
Let’s say the AUD is strong against the NZD and the exchange rate is 1.1000 if you’ve costed the order at $100 NZD, the customer will have to pay $91 AUD.
If the AUD is weak against the NZD and the exchange rate is 0.9800, if you’ve costed the order for $100 NZD the customer will have to pay $102 AUD (this is unusual but can happen and occurred in March 2019)